8 Lessons for Directors – “Put ethics first”

The IoDSA’s president, Dr Reuel Khoza, set the tone for the whole conference with a devastatingly accurate assessment of where we find ourselves as a country. As individuals and corporates, we all have to take responsibility for getting ourselves out of this mess. The rest of the presentations provided some of the answers as to how we are going to do it.

A key theme was that leadership—the right kind of leadership—is going to be critical in helping us to pull off another “South African miracle”. What I want to do in this article is crystallise some of the concrete things that directors and other leaders of corporate South Africa should be doing and thinking about. A lot of what corporate leaders will have to do will require them to take a broader view of their roles. This broader view is actually envisaged, to a certain extent, by the King III vision of board accountability to all its stakeholders, so it’s not an unbusinesslike approach. But it will require courage in no small measure.

Build a vision - and live by it. Khoza identified the fact that the country lacks a vision of its own destiny, and is rudderless as a result. Leadership does not take place in a vacuum. It needs a purpose. He also made a case for courage. As leaders, it’s important first of all to understand who you are and what you stand for—this was a point made by Prof Stella Nkomo. As part of this, remind yourself that the company you lead is part of society: business in society rather than business and society. Again, a view that is very much in harmony with King III.

Understand what the new kind of leader is — and consciously transform yourself. Craig Mitchelmore made the point that a new kind of leader is needed for the new kind of employee. Leadership that has emotional intelligence and can nurture employees to build loyalty is required; and because of the reach of the new media, leaders need to live their vision rather than just state it. We all know that corporates are “delayering”, so leaders are under pressure to do more. Another source of pressure for corporate leaders is the complex demands of society. The only solution, as Nkomo explained, is to develop the practical wisdom that the Greeks called phronesis. This is the kind of wisdom that Solomon displayed when he was confronted with the decision on who the mother of the baby was. Twenty-first Century leaders need to be flexible, resilient, and have the ability to see the possibilities and opportunities in everything.

Build relationships with government. The private sector needs to play a role in helping turn the country around—and that will mean building a relationship of trust with government. Prof William Gumede argued that these relationships need to be pragmatic in order to build a successful developmental state. As part of this dynamic, business needs to lobby actively to put its views across and contribute to the debate—it cannot sit on the sidelines and criticise. In fact, today’s boards must learn from the boards of the 1980s, which played such a role in ending apartheid and facilitating a positive transition. One of the ways to build credibility with government will be for organised business to take on the rogues in its midst, and discipline them effectively. Only then can we expect that government will truly get serious about corruption.
Build relationships with the unions. The other big player in South Africa is the unions. We can all agree that they are too militant for our taste and are creating a business-unfriendly labour market—but as part of this broader commitment to the country, it is imperative that business reach a better accommodation with labour. Again, this is the pragmatism that Gumede advocated.

Build skills. A consistent theme was people, and how they represent the true wealth potential of the country. And as Azar Jammine made very clear, we are slipping behind in the indicators that matter—and government initiatives are not working. For their own survival, business leaders need to make skills development programmes within their companies a priority—but they also need to work out ways in which they can affect skills development more broadly. One way could be through corporate social investment programmes that are much more targeted to building human capital, and through supporting the many non-governmental organisations that do great work.

One might even make a case for seeing the lack of skills as a business risk that boards should be mitigating.

Support small business and entrepreneurs. The global economy seems to be characterised by jobless growth—and yet our populations are growing and need work. The big creators of jobs are small and medium enterprises. Boards should play a much more active role in guiding their procurement policies to favour working with smaller companies and entrepreneurs who are engines of job creation.

Put ethics first. As Cynthia Schoeman so eloquently put it, leadership is the most powerful force influencing ethics. Whether it’s in a company or a country, leaders set the tone. Schoeman showed the business benefits of ethical behaviour, and she advocated certain leadership actions. One was to put ethics first: by reporting on it formally, by managing it and, most importantly, by setting the right example. Leaders’ actions are the bridge between what the rules say, and what is actually acceptable—something that connects with my earlier point that leaders have to live their vision rather than just state it.

Build out from pockets of excellence. This lesson, in a sense, summarises all the others. If, as Gumede said, business is a pocket of excellence then corporate leaders must not take their eyes off the ball when it comes to their own companies—the lessons above all relate to how to make business more successful in the current economic, social and political climate. However, the lessons also relate to leveraging that excellence for the benefit of the broader society in which business exists, and on which ultimately depends.

Our corporate leaders are being asked to play a greater role in society, and their skills have never been more valuable. It’s a challenging time to be a business leader, but the chance to make a real impact could not be greater.

For copies of the presentations from this years IoDSA Annual Business Update - Courageous Leadership, please see the downloadable PDF's below.